Court File and Parties

COURT FILE NO.: FC-21-450 DATE: 20241031

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: E.L.R., Applicant AND: D.M.S., Respondent AND: E.W.C. and E.C.M., Added Parties

BEFORE: McDermot J.

COUNSEL: Joan Cushon, agent for the Applicant Respondent Unrepresented Raymond Goddard and K. Timothy Lee for the Added Parties

HEARD: By written submissions

COSTS ENDORSEMENT

[1] Litigation costs for parties of average means are often financially ruinous. This case is a particularly egregious example.

[2] The Applicant E.L.R. and the Respondent D.M.S. are wife and husband. They have one child, E.G.D, who has now nearly reached adulthood. After their marriage broke down in late 2017 or early 2018, the parties entered into protracted and difficult litigation. Based upon their alleged involvement in and contributions to a farming property on which the matrimonial home was located, E.L.R.’s parents, E.W.C. and E.C.M. were added early on as respondents (the “Added Parties”). The parties went through a lengthy arbitration process from which the arbitrator resigned after an independent pre-screening of the parties. The parties then immediately began these court proceedings which were case managed by Jain J. of this court.

[3] On August 31, 2022, the case management judge, frustrated by lack of progress and the non-cooperation of the parties, set this matter down for a focused hearing. That hearing was to be in respect of the claim by the Respondent, D.M.S., to set aside certain separation agreements and consent arbitral awards as well as the Applicant’s and the Added Parties’ claims to have the Respondent’s pleadings struck by reason of his failure to comply with previous disclosure orders.

[4] The hearing was originally expected to take only one or two days, but in that estimate, the participants were sadly mistaken. The hearing, which began in May, 2023, went on for nearly 20 days into a second sittings in November, 2023 and then into the next year. The parties began final submissions which were adjourned because the Respondent had failed to advise the other parties that he had obtained transcripts of the hearing that he was using for those submissions. The total amount of trial time was approximately 18 days.

[5] This focused hearing was a runaway train. This was a case that was a disproportionate use of family law resources, a case, that in the words of Aaron Franks & Michael Zalev “gorged on court resources.” [^1] For that, I am sure that the court bears some of the blame. However, in my endorsement, I have laid much of the responsibility for the length of this hearing at the foot of the Respondent who arrived at court with his materials so disorganized that court staff had to take more than a day to put them into order. The court spent another day on a voir dire largely to address surreptitious recordings that the Respondent had made of conversations between himself and the Applicant; most of those recordings were not admitted into evidence and the one that was allowed in was found to be largely immaterial to the issues before the court. The Respondent was cross-examined for five days (he went first as it was his case to make) largely because he was an unreliable and evasive witness. Nine days into the hearing, the Respondent withdrew a major claim to set aside a consent arbitral award; this was largely self serving as the Respondent was facing having to repay money that was previously released to him under that consent award. That arbitral agreement was one of the major reasons that the Added Parties were in court as funds were also released to them. Further delays occurred when the Respondent tried to use transcripts that he had ordered for the hearing without notifying opposing counsel and final submissions had to be adjourned to arrange for those transcripts to be provided to all parties.

[6] The Respondent says that he enjoyed mixed success in this hearing. That could not be further from the truth. The Respondent’s claim to set aside the agreements and consent awards was dismissed in its entirety. The Applicant’s and the Added Parties’ claims to strike the Respondent’s pleadings were allowed (subject to a provision allowing the Respondent to set that aside if he could prove good faith compliance with the disclosure orders). The Applicant and the Added Parties had complete success in this proceeding.

[7] I mentioned above that the litigation was ruinous. The Respondent well knows the costs of legal fees; at different times he said that he had paid $400,000 and later $500,000 to his lawyers and because of these costs he ended up unrepresented at this hearing. He said in his costs submissions that he paid more than two times his annual salary (nearly $200,000 per year) to his criminal lawyer concerning charges involving alleged sexual abuse to E.G.D. (those charges were dismissed). Based upon their success in the litigation, the Applicant and the Added Parties now claim costs, the Applicant full recovery costs of $261,766.10 and the Added Parties $277,424.82 including costs thrown away for the claim withdrawn concerning the arbitral award of $139,871.35. If these parties are successful in their submissions, the costs payable by the Respondent will be well in excess of $500,000.

[8] The Respondent says that he also requests costs of $133,537; his claim rests upon his suggestion that success was divided and because the Applicant and her parents engaged in unreasonable litigation behaviour at trial.

[9] Success is an issue to be addressed between the Respondent on one hand and each of the Applicant and her parents on the other. I will firstly review the entitlement to costs based upon the success of the parties. I will then review the respective claims for costs for reasonableness, the scale of the costs and payment of those costs. Because different considerations apply, the costs claims of the Applicant and her parents will be addressed separately.

Result

[10] For the reasons set out below, I have determined the following:

a. The Respondent shall pay the costs of this proceeding as follows: i. The Respondent shall pay the Applicant $200,000 in costs; ii. The Respondent shall pay the Added Parties $175,000 in costs; iii. Costs are payable within 60 days.

Entitlement to Costs

[11] Under r. 24(1) of the Family Law Rules, [^2] costs are presumed to follow the event and the winning party is generally entitled to costs. An exception to this rule is unreasonable litigation behaviour; if a party acts unreasonably, even if successful, costs may be awarded against that party; see r. 24(4).

[12] Modern costs rules are designed to foster four fundamental purposes: (1) to partially indemnify successful litigants; (2) to encourage settlement, (3) to discourage and sanction inappropriate behaviour by litigants; and (4) to ensure that cases are dealt with justly under subrule 2 (2) of the Family Law Rules. See Mattina v. Mattina, 2018 ONCA 867.

[13] As well, proportionality is an additional purpose to a costs award, which must be proportionate to the issues before the court including the complexity of those issues and the time necessary to address those issues in the hearing: see Beaver v. Hill, 2018 ONCA 840 and r. 24(12)(a).

[14] D.M.S. says that success between the parties is divided and that he is entitled to costs because of the unreasonable behaviour of both the Applicant and the Added Parties.

[15] Regarding success, the claim by the Respondent that success in this matter was divided is absurd. Both the Applicant’s and her parents’ interests were the same in this focussed hearing which was to defend the various agreements that were entered into prior to and during the arbitration process and to strike the Respondent’s pleadings as his disclosure owing to all parties remained unfulfilled at the date of the hearing. Although the Respondent is correct that some of his disclosure was found to have been provided, on the major issues in this focused hearing, the set-aside claims of the Respondent and the claim to strike the Respondent’s pleadings, both the Applicant and her parents were wholly successful. To suggest otherwise would move these parties into an alternate reality where success is failure and failure is success. In this trial, E.L.R. and her parents were wholly successful.

[16] This is made apparent from the offers filed by the parties and especially by the Respondent. He filed seven different offers that he stated in his submissions were extremely reasonable. That again is false. No offer was severable and therefore all of the offers were “all or nothing”. The offers all provided that the agreements would all be set aside but that the Respondent could keep the money paid to him pursuant to the arbitral consent whereby money was released to all of the parties from the sale of the matrimonial home. The offers all address both spousal and child support issues as well as equalization, issues which were not before the court on the focused hearing. None of his offers address the striking of pleadings. It is apparent that all of the offers submitted by the Respondent were in respect of the entire proceeding and not just the focused hearing. Moreover, on the one issue before the court at the focused hearing and addressed in the Respondent’s offers, the Respondent was unsuccessful as none of the separation agreements or arbitral agreements were set aside.

[17] Moreover, regarding conduct to be taken into account in the awarding of costs under r. 24(4) and (5), the Respondent is correct that at least one witness that the Applicant called was unnecessary (Alexander Zubin), and that the Applicant called other irrelevant evidence. However, none of that was objected to and, in fact, the Applicant’s poor behaviour pales in comparison to the misconduct of the Respondent. I have summarized much of this in para. 266 of my trial endorsement, but briefly, his unreasonable conduct includes the following:

a. The Respondent withdrew his claim to set aside the arbitral agreement dated May 23, 2019 concerning disbursement of funds nine days into the hearing. He is correct when he states that this was not the only reason that E.C.M. and E.W.C. were at the hearing; they also requested the Respondent’s pleadings to be struck. However, the withdrawal of that claim was completely unreasonable regardless of this and presumptively results in an order for costs thrown away against the Respondent under r. 12(3). b. The Respondent’s answer was unnecessarily lengthy and inflammatory. The premises regarding the agreements and the basis for the Respondent’s arguments concerning the setting aside of the agreements were based upon allegations made in that document, much of which was unsupportable and a waste of time. c. Contrary to the assertion in his costs submissions, the Respondent’s documents were in complete disorder at the commencement of the hearing. In fact, it took court staff a full day to sort out his materials and organize it for trial. The other parties and counsel were forced to cool their heels during this time while the materials were organized. d. The Respondent’s evidence was inconsistent and he was evasive and argumentative on cross-examination which unnecessarily lengthened his cross-examination by Ms. Cushon. e. The Respondent misbehaved during the arbitration process. He agreed to a school trip and then withdrew his consent afterwards, necessitating an argued motion. He continued with the arbitration right up until the eve of the hearing when he raised the issue of power imbalance at the last minute. The arbitration came to an end as a result. Contrary to the assertion of the Respondent that the pre-screening and resignation of the arbitrator proved a power imbalance, there was no finding of this and no evidence at this hearing of a power imbalance as the independent pre-screening report was not entered as evidence and there was no finding of a power imbalance by Arbitrator Perkins; it remains unknown as to why he resigned. f. The Respondent made a number of surreptitious recordings necessitating a one day voir dire at which he was unsuccessful other than one recording where the Applicant acknowledged that she knew she was being recorded. He attempted to surreptitiously record a reconciliation therapy session without the knowledge of the therapist or the child. The recording that was allowed into evidence was not particularly probative of any pressure or undue influence brought to bear on the Respondent by E.L.R. g. The purpose of this lengthy hearing appears to have been a matter of principle for the Respondent rather than being directed toward a meaningful remedy. Most of the agreements that the Respondent sought to set aside were largely irrelevant by the date of the hearing other than the agreement for interim disbursement of funds (which the Respondent ultimately agreed was valid). He asked for a finding of parental alienation in the absence of parenting relief being sought at the hearing. The Respondent’s purpose of bringing this proceeding to set aside the agreements was not related to any practical purpose other than proving a point. In acting this way, the Respondent meets the definition of a querulous litigant as defined by Thomas J. in Olumide v Alberta (Human Rights Commission), 2019 ABQB 186 at para. 56. h. The Respondent neglected to tell the other parties that he was obtaining and using transcripts of the trial in making final submissions, thereby putting them at a disadvantage. Had a lawyer done this, it would have been seen as sharp litigation practice and no exception can be made for any party, even one who is self represented: see Lightfoot v Lightfoot, 2024 ONSC 3803. i. The Respondent unreasonably would not approve the draft disclosure order of Eberhard J. as to form and content, which resulted in a hearing before a hearings officer to settle the order. The order was settled on exactly the terms that were proposed by the Applicant and the Added Parties.

[18] Apart from this behaviour, it must be recalled that the Respondent failed, without reasonable excuse, to provide much of the disclosure ordered by Eberhard J. and Jain J. in this proceeding. His reasons for doing so made no sense and his behaviour in doing so delayed the proceedings substantially until Justice Jain lost patience and set this hearing down. His delays in the conduct of these proceedings allowed him to transfer the lion’s share of his interest in the home owned by him and his girlfriend to her, thereby making him largely judgment proof. The misbehaviour of the Respondent is clear and was pervasive throughout this hearing. It lengthened the proceedings to little purpose at the expense of all of the other parties.

[19] The Respondent suggests that the matter is not finally adjudicated because of the provision in the order that permits him to apply to set aside my striking of his pleadings if he complies with the disclosure order. However, r. 24(10) of the Family Law Rules requires the court to determine “promptly” the costs of each step in the hearing and whether or not the order striking pleadings is set aside, the responsibility for failing to make disclosure and bringing the proceedings to set aside the agreements ultimately rests with the Respondent. This costs determination is not premature in any way.

[20] The Respondent was unsuccessful on all issues addressed at the focused hearing. He withdrew a major claim nine days into the hearing and he indulged in other unreasonable behaviour within the meaning of r. 12(3). The Respondent shall pay the costs of this hearing for both the Applicant and the Added Parties and the quantum of these costs will now be determined below.

Costs Owing to the Applicant

[21] As set out above, the Applicant seeks costs of $261,766.10 on a full recovery basis. She claims costs of both her counsel, Joan Cushon, as well as her own work on the file as she attended on several days without Ms. Cushon when she was ill and did work on the file. She says that any work that she duplicated for Ms. Cushon or normal work that a client might be asked to do are not included in what she is claiming for work done on the file.

[22] E.L.R.’s claim for full recovery costs is based upon the following:

a. The Respondent’s unreasonable or bad faith behaviour; b. The Applicant’s offers to settle made in this matter.

Respondent’s Unreasonable or Bad Faith Behaviour

[23] I have already outlined both above and in my Trial Endorsement as to where the Respondent was guilty of unreasonable behaviour prior to and during this hearing. Unreasonable behaviour of a party is one factor in setting the amount of costs under r. 24(12) of the Family Law Rules.

[24] However, the Respondent was not the only person at this trial who was guilty of unreasonable behaviour. The Applicant was, at times, also badly behaved. During the Respondent’s case, she effectively tossed out the suggestion that the separation agreements were now irrelevant and could stand, but did not formally enter into a consent or negotiated that issue during the trial so that a formal withdrawal of her objection to the setting aside of those agreements could be put on the record. The Respondent continued to lead evidence regarding the separation agreements without objection. Moreover, the Applicant had requested (before Justice Eberhard) that disclosure be provided of the Respondent’s medical records because of his claims of mental incapacity in order to set aside the agreements. The Respondent was very clear throughout that he was not relying upon mental incapacity and, in fact, did not mention that in his evidence or his submissions to set aside the agreements and awards. The issue raised by the Applicant of the Respondent’s mental incapacity was a “red herring” which was not relevant to the matters before the court. She led evidence of supposed theft of her domain name and of viruses infecting her work computers which was confusing and often irrelevant.

[25] However, although the Applicant was also guilty of blameworthy conduct, her poor conduct is minor compared to that of the Respondent as outlined above. As determined above, the Respondent has behaved unreasonably throughout this litigation.

[26] However, E.L.R. says that the Respondent’s conduct crossed the line into bad faith behaviour. Subrule 24(8) of the rules states that if a party has acted in bad faith, the court shall decide costs on a full recovery basis and order the party to pay them immediately. Full recovery costs therefore become mandatory if there is a finding of bad faith and those costs are payable forthwith as a result.

[27] Bad faith is a step beyond unreasonable behaviour. Essentially, it comprises conduct that is both malicious and is nefarious insofar which appears to do one thing, but is intended to do another. It is a high threshold and rarely granted: see Cozzi v. Smith, 2015 ONSC 3626; Scipione v. Del Sordo, 2015 ONSC 5982. However, it is not an unreachable threshold.

[28] In S. (C.) v. S. (M.), [2007] O.J. No. 2164 (S.C.J.) at para. 17, Perkins, J. defined bad faith as follows:

In order to come within the meaning of bad faith in subrule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.

[29] In Scipione, supra, at para. 96 - 99 Pazaratz J. defined bad faith as requiring:

a. Intentional bad behaviour: “it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation” (Scipione at para. 96); b. Conduct that appears to be intended to do one thing but is actually intended to do another; and c. “[S]ome element of malice or intent to harm”: (Scipione, para 98).

[30] Because of the requirement under r. 12(8) to impose full recovery costs, the court must give careful consideration of whether the conduct of the party accused of bad faith behaviour actually crossed that very high threshold.

[31] In the present case, I believe that D.M.S. exhibited some elements of bad faith behaviour. He spent much of his energy on the narrative of parental alienation of his daughter by E.L.R. He freely acknowledged that he did not do this out of any interest in addressing the needs of his daughter or because of any issues raised at the hearing (parenting issues had long been settled when this focused hearing began) but because he wished to present that finding to E.G.D. when she was an adult to prove that he always wanted a relationship with her but that it was E.L.R. who was guilty of destroying that relationship. The agreements that he sought to set aside were largely irrelevant today as they addressed child support and parenting issues, which were superseded by D.M.S.’s decision to withdraw from the parenting proceedings, and temporary child support was set by Eberhard J. D.M.S. withdrew his hardship motion which was scheduled at that hearing (indeed, he had to as he failed to provide the disclosure ordered to be provided for that motion). His intentions were, as found by myself, to “make a point” rather than achieve a practical result or remedy.

[32] Moreover, the nature of the excuses made for the failure to disclose were deceptive. His illegible copies were made because, D.M.S. asserted, he had to send the disclosure by way of a PDF file rather than as a link. But he could have made paper copies and just couriered that disclosure to each party’s counsel. His failure to obtain information from his girlfriend was duplicitous when he also called her as a witness to give self serving evidence; I find it extremely concerning that she would appear to give evidence that would serve her own interests, yet she refused to provide the ordered disclosure because it might harm her interests and allow E.L.R. to wreak havoc on her finances. This is in the context of being the transferee of the majority of title to her common residence with the Respondent.

[33] The malice that was behind the actions of the Respondent was obvious from the hearing. It was also apparent from the Respondent’s materials that he feels that the Applicant’s and her parents’ behaviour is contemptable and that they are wholly to blame for the litigation and the failure to settle this litigation. In his costs submissions, he calls the criminal charges “heinous” and blames the Applicant for those charges even though they were presumably based upon the child’s own disclosures to the police. His own dishonesty is shown in his costs submissions where he says that the “majority” of his evidence was allowed at the voir dire; this is clearly not the case as the majority of the evidence that he sought to enter at that voir dire was actually excluded.

[34] However, this is not to say that this animosity only went one way; it could be seen that there was plenty of anger on the part of both E.L.R. and her father (who gave evidence), E.W.C. Eberhard J. noted that the Applicant’s “stench of vengeance” against the Respondent on the motion and she reduced her costs award as a result. The latest example of the animosity of the Applicant was the third party disclosure motion brought by the Respondent to obtain his employment records from his employer; the Applicant’s materials requested final orders on a 14B motion and contained embarrassing materials not relevant to the third party disclosure motion. If there was malice, it went both ways. To find bad faith conduct, it would have to have its roots in the Respondent’s own malice rather than the high conflict nature of this litigation on both sides.

[35] The Respondent’s level of malice, although present, did not rise to the level necessary to find bad faith conduct and may have related to the high conflict nature of this litigation. Neither did his level of deception rise to the level of bad faith conduct.

[36] As well, the Respondent bringing these proceedings to make a point may also be a result of the Respondent’s self represented status. He may not have realized that litigation is always directed towards a remedy and that litigation brought out of principle only cannot be entertained by the court. It is often difficult for a litigant to distinguish between a finding and a remedy. I therefore decline to find bad faith conduct or engage r. 12(8) in assessing costs.

[37] I therefore find that the Respondent’s litigation behaviour, although close to bad faith conduct, failed to rise to that level. The costs in this matter will reflect the success of the Applicant in this focused hearing as well as the Respondent’s unreasonable behaviour only. Rule 12(8) is not applicable to this case.

Offers to Settle

[38] The Applicant filed with her costs submissions two offers to settle. One was filed on March 3, 2021, before this matter was set down for the focused hearing. I had difficulty in relating that offer to the present case other than the provision in that offer that stated that all of the awards of Arbitrator Perkins “are valid and shall remain valid.” However, that offer was obviously not applicable to the focused hearing also spoke of disclosure of the Respondent’s legal file, an issue not before the court at the focused hearing. It is not an offer that is relevant to this focused trial under r. 18 and does not affect the Respondent’s liability for costs to the Applicant.

[39] The second offer is an email sent to the Respondent by the Applicant on September 1, 2022 which was sent as part of a dialogue about the parameters of the focused hearing and the Applicant’s request to Justice Jain to amend her endorsement of March 29, 2022 which set this matter down. That email stated that the Applicant was willing to permit the Respondent to withdraw claims to set aside one or all of the listed agreements and awards that were placed before the court pursuant to Justice Jain’s amended endorsement. It is unclear whether the Applicant was waiving costs if those claims were withdrawn.

[40] This was not a formal offer under r. 18. It also does not engage r. 18 in awarding costs in this matter.

[41] Neither of the Applicant’s offers speak to the disclosure issues considered in the focused hearing.

[42] There was a third offer appended to the Applicant’s costs submissions; as this was made after I issued my endorsement on the focused hearing and speaks to the costs of the matter which I am considering in this endorsement, I declined to review it in setting the costs of this proceeding.

[43] Unlike the Added Parties, it appears that neither the Applicant nor the Respondent filed specific offers to settle the issues before the court for the focused hearing. This constitutes unreasonable behaviour on the part of both of these parties: see Laing v. Mahmoud, 2011 ONSC 6737. I do not take the Applicant’s offers into account in determining the Applicant’s costs award in this proceeding.

Quantum of Costs

[44] The Applicant requests costs on a full recovery basis in the amount of $261,766.10 as set out in the Bill of Costs attached to her costs submissions.

[45] According to the Bill of Costs, Ms. Cushon, who acted as agent for the Applicant, spent 542.8 hours on her work on this file. Her time spent for trial preparation total 207 hours and her attendance at trial and preparation during trial used up another 160 hours. This leaves about 175 hours for other matters that she addressed coming up to trial including the review and preparation of affidavits, responding and arguing 14B motions concerning the trial and the adjournment of the Respondent’s support motion and trial management issues.

[46] Ms. Cushon’s hourly rate was $400 per hour. She has 35 years of experience. The amount that she charged E.L.R. must be a discounted rate considering her years of experience. I find this to be a reasonable hourly rate.

[47] It appears from the Bill of Costs that E.L.R., being a family law lawyer, extensively assisted Ms. Cushon in trial preparation and preparation of documents. She prepared the four Requests to Admit that were used at trial. She has charged out her time, where it did not duplicate Ms. Cushon’s time, at $100 per hour. [^3] She notes in the Bill of Costs that she spent time on certain issues but did not charge for that time because it was nothing other than work that any other litigant would have to do to prepare for trial. She charges her time as a self represented litigant which is permitted under Pirani v. Esmail, 2014 ONCA 279, a court of appeal decision. D.M.S. cannot complain about this as he also claimed costs as a self represented litigant. As E.L.R. is a practicing family law lawyer, the rate that she claims is reasonable.

[48] I have the following comments concerning the Bill of Costs:

a. Regarding the November 22, 2022 14B motions, these were both dismissed and referred to the focused hearing. Costs were reserved to me. Those motions were not returned at the commencement of the trial as contemplated by Justice Jain. I disallow these costs (JC – 2.7 hours). b. On January 20, 2023, the parties attended for a Trial Scheduling Conference. The TSC did not proceed and the only issue argued was the issue of the Respondent’s request to move the matter back to Oshawa. The Respondent was unsuccessful in this request and costs follow the event. Costs were, in fact, not reserved, but there is no necessity to do so under the recent amendments to r. 24(11). These costs are allowed to the Applicant. c. There was a 14B motion by the Respondent to address a surreptitious recording of a reunification therapy session. The Applicant says in her submissions that this motion was withdrawn and that there should be costs consequences under r. 12(3). However, the claim was not withdrawn as it was considered and addressed in my endorsement on the voir dire dated May 23, 2023. Rule 12 does not apply. However, the Respondent was ultimately unsuccessful in entering the recording of the therapy session and these costs are therefore allowed. d. On January 19, 2024, the parties attended for final submissions. During the hearing, it became apparent that the Respondent had ordered transcripts, was using them in his submissions and had failed to inform the other parties or provide copies of the transcripts which he should have done as this put the Applicant and her parents at a litigation disadvantage. I ordered costs thrown away to the Applicant (who attended and made submissions in person) of $2,500. She apparently did not include Ms. Cushon’s time when she made submissions regarding her costs thrown away. Those costs would normally include the costs of preparing the final submissions and preparing for that hearing, for which Ms. Cushon charged 27 hours of time worth more than $10,000. Even though I have already ordered costs thrown away, I allow the costs of Ms. Cushon on top of that as the Applicant may not have been billed for those costs or aware of them when she made her costs submissions on January 19, 2024.

[49] I find the remaining time and disbursements charged in the Bill of Costs to be reasonable. In his costs submissions, D.M.S. makes no submissions otherwise or complain about the time spent by the Applicant’s counsel or the Applicant as disclosed in the Bill of Costs.

[50] The total costs of the Applicant on a full recovery basis, adjusting for the time and costs removed above, are therefore $261,065.10.

[51] I am not ordering full recovery costs as requested by the Applicant. I have found that the Respondent was not guilty of bad faith conduct which would have mandated full recovery costs. In the normal course partial recovery costs (usually set at 60% of full recovery costs) would be $156,639.

[52] However, much of the responsibility for why this trial took so long lies with the Respondent. Had he withdrawn the claims regarding the agreements that were now irrelevant as requested in the Applicant’s email dated September 1, 2022, it would have significantly shortened the trial. Moreover, had the Respondent made the disclosure he should have and provided clear and unredacted copies of all of his credit card statements and other documents, the trial on the striking of his pleadings would have been unnecessary. The Respondent’s evasive and confrontational approach to his evidence made it necessary for Ms. Cushon to take four days to cross-examine D.M.S. notwithstanding my own attempts to have him answer questions put to him in a direct manner. I take his unreasonable behaviour into account in setting the costs in this matter.

[53] Regarding proportionality, it became a daily event for Mr. Goddard for the Added Parties to stand up and complain about the amount of time this trial was taking and about the costs to his clients. That again was because of the Respondent’s evasive testimony on the witness stand, often answering questions with questions or responding in a belligerent fashion to Ms. Cushon. It is clear that, had the Respondent conducted himself differently, this trial could have been completed in a much shorter time period and I have already outlined where the Respondent caused this trial to disproportionately long. Considering the issues, the trial should have been shorter, but it is difficult to penalize a costs claimant for proportionality where the party against whom costs are sought was responsible for the disproportionate length of the hearing.

[54] D.M.S. says that he is impecunious and that he does not have the resources or the income sufficient to pay any costs. However, although the court may take a party’s inability to pay costs into account in determining costs, that is usually where it affects the lifestyle of the parties’ child: see, for example, Van Rassel v. Van Rassel, [2008] O.J. No. 4410 (S.C.J.). In the present case, that would militate against the Applicant being forced to bear her own costs as she would still have to pay her lawyer yet also has to support her daughter who is now going to university.

[55] Moreover, the case law suggests that ability to pay will be less of a mitigating factor when the impecunious party has acted unreasonably, or where their claim was illogical or without merit. See: Gobin v. Gobin, 2009 ONCJ 278 and D.D. v. H.G., 2020 ONSC 1919. Moreover, a party should not hide behind impecuniosity in order to litigate with impunity: see Culp v. Culp, 2019 ONSC 7051 (S.C.J.) and Mark v. Bhangari, 2010 ONSC 4638 (S.C.J.). As stated in Balsmeier v Balsmeier, 2016 ONSC 3485:

I adopt the comments of McGee J. in Mohr v. Sweeney, 2016 ONSC 3238, 2016 CarswellOnt 7716, at para. 17, citing Balaban v. Balaban, 2007 CarswellOnt 1518, at para. 7: “[T]hose who can least afford to litigate should be most motivated to seriously pursue settlement, and avoid unnecessary proceedings.”

[56] I do not find the Respondent’s financial circumstances to be a factor in awarding costs, especially where D.M.S. has transferred much of his interest in his home to his partner.

[57] I also take into account the withdrawal by the Respondent of his request to set aside the consent dated May 23, 2019 and the corresponding arbitral award dated February 25, 2020 nine days into the hearing. As this claim was contained in the Respondent’s amended Answer and Claim, the withdrawal engages r. 12(3) which requires a party to pay the costs of the issues that were withdrawn. Unlike the Added Parties (and then only to some extent), the Applicant has not separated out her costs of addressing this particular arbitral award prior to or at the trial although there were entries in the Bill of Costs concerning review of those awards and the arbitral process. Moreover, concerning the Applicant, there were other agreements that the Respondent sought to set aside concerning her that remained in issue after that withdrawal. It is, however, without a doubt that the addressing of that award (which is one of the few agreements still relevant today as it concerned the interim disbursement of funds from the matrimonial home) would have increased the Applicant’s costs. I can only take this into account in fixing costs of the proceedings.

[58] The Respondent’s poor behaviour and his withdrawal of the claim to set aside the arbitral award removes this matter from a pure award of partial recovery costs which would, as noted above, be rounded up to $157,000. As a result, the costs awarded should be substantially greater than a partial recovery order. I therefore find that the Respondent shall pay the Applicant her costs of this focused hearing in the amount of $200,000. As neither child nor spousal support was in issue in this focused hearing, I decline to make an order that the costs shall be enforceable as support pursuant to s. 1 of the Family Responsibility and Support Arrears Enforcement Act, 1996. [^4] Costs are payable within 60 days.

Costs Owing to the Added Parties

[59] The Added Parties, the Applicant’s parents, were present throughout the hearing with their counsel, Mr. Goddard and co-counsel, Mr. Lee. When the Respondent withdrew his claim to set aside an arbitral award nine days into the hearing, Mr. Goddard, solicitor for those Added Parties, said that this award was the only reason his clients were there and he was not present the next day at trial. However, he quickly returned and continued with the trial and was there until the end. It was apparent that the Added Parties had an interest in the claim to strike D.M.S.’s pleadings and that their counsel’s attendance continued to be required until the matter was complete.

[60] The Added Parties requested full recovery costs of $277,424.82. The Bill of Costs breaks down the costs to address the costs of setting aside the agreements of $105,637.35 as opposed to the costs of addressing the striking of pleadings which are quantified as $139,871.35. Those estimates divide the disbursements of $2,653.69 equally between the two issues. Partial recovery costs are suggested to be fixed as 60% of the total claimed at $188,094.03.

[61] There are certain issues and findings which are discussed above, including the question of success, the Respondent’s ability to pay the costs, his unreasonable behaviour and proportionality which need not be repeated or considered concerning the Added Parties’ claim for costs. Those issues are as applicable to the Added Parties as they were to the Applicant’s costs claims.

[62] The specific issues which require special consideration concerning the Added Parties are:

a. The issue of the withdrawal by the Respondent of his claim to set aside the May 23, 2019 consent and the February 25, 2020 arbitral award and the cost consequences of that withdrawal; b. The Added Parties’ Offer to Settle; c. The necessity of the Added Parties’ co-counsel at trial.

Withdrawal of Claim

[63] The Added Parties state that the only reason that they addressed the Respondent’s set-aside claim was because of the May 23, 2019 Minutes of Settlement eventually reflected in a consent arbitral award dated February 25, 2020. That consent specifically concerned the Added Parties as they had received a relatively minor payout of $25,000 from those Minutes. Presumably, if the agreement was set aside, that money would have to be returned (as would the funds received by D.M.S.).

[64] That is apparent from the Added Parties’ Offer to Settle dated January 9, 2022 which provided that the Respondent would agree to withdraw his claim to set aside the May 23 agreement and the corresponding arbitral award with costs thrown away of $7,500. There are no other agreements or awards mentioned in the Added Parties’ offer.

[65] I have already found that, although the Respondent was guilty of unreasonable behaviour, he did not cross the line to bad faith behaviour. However, Mr. Goddard requests that I reconsider that question, but only from the perspective of the withdrawal of the claim to set aside the arbitration consent as it relates to the Added Parties. This is because of the provisions of r. 12(3) and the caselaw surrounding that rule.

[66] In Walia v. Walia, 2022 ONSC 6704 Agarawal J. considered the process of determining costs of a withdrawn claim [at para. 26 – 27]:

a. Firstly, the court must determine whether the withdrawn claim is bona fide? Is it a frivolous or vexatious claim? Did the party withdrawing the claim have some basis to bring the claim. b. If it is not found to be a bona fide claim, then it is necessary for the court to make a finding of bad faith conduct and the costs thrown away on the abandoned claim would then be assessed on a full recovery basis.

[67] As noted, I found above that the Respondent was generally guilty of unreasonable litigation behaviour in his conduct of this litigation. I declined to find bad faith conduct. I believe that the same applies to the specific claim of bad faith conduct considering the arbitral consent and award for the following reasons:

a. The claim to set aside the arbitral award and the corresponding consent arose with the Respondent’s amended Answer and Claim. That was filed with legal advice through his then counsel, Brian Ludmer and, once the Respondent became unrepresented, he proceeded with a claim that he presumably was told by his former counsel was valid. The root of the set-aside claims was the amended Answer as was apparent from the materials and not any demonstrated malicious intent. The Respondent presumably advised his counsel of the facts behind his set-aside claims and counsel presumably provided the advice to raise the issue of setting aside the consent. That speaks to whether the Respondent was well intentioned in making this claim. b. If a claim is not bona fide and brought in bad faith, the motivating factor must be something other than an honest belief that the Respondent had grounds to set aside the consent. It is apparent from the Respondent’s materials that he believes that the Added Parties’ claims had no merit and he does not believe that any funds should be disbursed to the Added Parties. There is no demonstrated hidden or nefarious purpose to bringing the claim to set aside the arbitral award other than the Respondent’s firm belief that the Added Parties deserved to receive nothing from the matrimonial home. c. The Respondent did have, in my view, an honest belief that there were grounds to set aside the consent arising from the second pre-screening conducted by Hilary Linton. That pre-screening, for the Respondent, was evidence that there was an imbalance of bargaining power which led to Arbitrator Perkins’ resignation. Although I did not agree with this interpretation of the facts in my findings and determination of that issue, as stated in Walia, it is not the merits which dictate whether a matter is bona fide; it is largely the motivation of the party bringing the withdrawn claim. d. As in Walia, this is a high conflict case and all of the parties have acted unreasonably in the conduct of this litigation. For the Added Parties, when E.C.M. testified his animosity towards the Respondent was palpable and fully apparent. Lately, as noted above, it was inconceivable to me as to why the Added Parties would object in any way to the Respondent’s request for third party disclosure from his employer to comply with the disclosure that the Respondent was ordered to make. Argarwal J. pointed out in Walia that it is difficult to make a finding of bad faith conduct when there is acrimony and poor behaviour on both sides and that appears to be the case here as well. e. The costs claimed by the Added Parties for the set-aside claim are disproportionate. They say that they incurred more than $100,000 in costs to set aside an agreement that provided them with a payment of $25,000. Part of the reason for this expense is the fact that they were represented by two counsel which, in my view, was unnecessary for this claim, especially when the Applicant only had one lawyer / agent, Ms. Cushon. I acknowledge that a major reason for these excessive costs was the Respondent’s unreasonable litigation behaviour and Mr. Goddard stood up on at least four occasions complaining of the length of these proceedings as the focused hearing progressed. However, none of these parties seemed to be capable of working together to shorten this trial and for that all parties are responsible.

[68] I therefore do not find that there was bad faith conduct on the part of the Respondent as submitted by the Added Parties. The Respondent’s unreasonable litigation conduct will be taken into account in assessing the amount of costs payable by him.

Offer to Settle

[69] The only parties to file an Offer to Settle concerning this focused hearing were the Added Parties. They served an offer dated September 9, 2022 which was concerning the set-aside claim regarding the arbitral consent and award. The issue of striking the Respondent’s pleadings was not addressed by the offer.

[70] None of the other parties filed an offer concerning this focused hearing. Both the Applicant and the Respondent’s offers were concerning the entire proceeding and not just this event.

[71] The Added Parties offer permitted the Respondent to withdraw his claim to set aside the arbitral consent dated May 23, 2019 and the corresponding award in exchange for a payment of costs by the Respondent of only $7,500. He could have accepted that offer up to the commencement of the hearing at minimal cost but did not. Considering the costs that are now in issue after 18 days of trial, the Respondent should have accepted the offer.

[72] I have already said that the Respondent’s conduct resulted in this hearing going on as long as it did. His evasive and argumentative evidence on cross-examination resulted in his cross-examination being extended over four days. The voir dire could have been avoided had the Respondent not attempted to file surreptitious recordings including a recording of reconciliation therapy at this trial. Most of this evidence was excluded at the voir dire. On another occasion, the Respondent’s failure to advise the parties of his use of trial transcripts resulted in the final submissions being adjourned to another date.

[73] That being said, I question the utility of the offer that was filed by the Added Parties in light of the fact that there were two parts to this hearing. If the hearing was only concerning the setting aside of the orders and agreements, there is little question that r. 18 would have provided the Added Parties with an award of full recovery costs. However, the Added Parties did not object to the Applicant’s suggestion in her email that all of the agreements and the striking of pleadings be addressed in one hearing. [^5] As a result, it is difficult to separate out the two issues at trial and the costs of those two issues. Each party called their evidence and were cross-examined on all issues and the Added Parties advocated a striking of the Respondent’s pleadings as did the Applicant; the trial was not bifurcated in any way. The Added Parties were allied with the Respondent because the disclosure that the Respondent failed to make was owed to both E.L.R. and her parents. It is unlikely that, had the offer been accepted by the Respondent and he had paid the costs, that there would have been significant savings to the Added Parties as they would have had to have been at the trial throughout regardless of that acceptance.

[74] Because the offer does not address all of the issues at this trial, therefore, the court must determine from the Bill of Costs as to whether the time spent has been allocated on a reasonable basis concerning the two issues. The Added Parties’ costs submissions state that the Bill of Costs attached to those submissions has been “vetted” to parse out the two major issues considered at the hearing in the amounts set out above. In the Bill of Costs, there are specific time entries concerning preparation for the set-aside issues at the hearing; these time entries total $14,192. Based on the offer, those costs will be awarded on a full recovery basis.

[75] However, $14,192 is a far cry from the $105,637.35 that the Added Parties say that they spent on the set-aside claim. Other than the specific entries noted above, neither the costs submissions nor the Bill of Costs disclose exactly how those costs were divided up or the basis for the division of the time spent. To trigger full recovery costs a party must do as well or better than all the terms of any offer (or a severable section of an offer): See Paranavitana v. Nanayakkara, 2010 ONSC 2257, [2010] O.J. No. 1566 (S.C.J.); Rebiere v Rebiere, 2015 ONSC 2129 (S.C.J.); Scipione v Scipione, 2015 ONSC 5982 (S.C.J.). That means that the costs related to the issues contained in the offer must be apparent on the face of the material and in this case they are not. Although I take the offer into account in setting costs and other than the specific entries concerning the set-aside claim, the offer does not result in full recovery costs requested for the set-aside issue under r. 18.

[76] I also have concerns, as noted above, about proportionality. In this matter, the Added Parties were concerned about the setting aside of an agreement under which $25,000 was at stake for them. They claim more than $100,000 in costs respecting that issue and more than $270,000 in total. There were two counsel in this matter for the Added Parties; this is notwithstanding that although the trial was long and involved a difficult self represented party, the issues were not overly complicated. As well, the Added Parties’ position was identical in the focused hearing to the Applicant’s at this hearing.

[77] Essentially, the overriding factor in fixing costs is reasonableness: see Jordan v. Stewart, 2013 ONSC 5037. In Sepiashvili v. Sepiashvili, [2001] O.J. No. 3843 (S.C.J.), the court determined that co-counsel was unnecessary for a routine cross-examination on a routine motion. At para. 20, Wildman J. pointed out that:

I am assuming that the decision to spend so much money preparing for this motion was Mr. Sapir's rather than his counsel's. Regardless of the outcome of the case, a client is not entitled to direct vast resources to litigation and expect full reimbursement. When the rules use the term "full recovery costs", there is an implied qualification that the costs incurred must be reasonable. There must be some assessment of the most effective use of resources to present the case, and some attempt to approach the matter in a cost-effective manner. This is particularly so in a case such as this, in which the resources of the parties are not balanced. I am left to wonder if these parties would be closer to resolution if more of Mr. Sapir's funds were offered to his wife rather than directed to funding this litigation. I urge the parties to rethink their approach to this case, as their adversarial conduct to date has been very expensive and not terribly productive.

[78] I do not find that it was necessary to have co-counsel present for the entire hearing. That is unreasonable. The time that Mr. Lee spent at trial totaled $28,825 according to the Bill of Costs and I am disallowing that amount. Otherwise, his work on the file did not duplicate that of Mr. Goddard. The remaining work that he claimed for Mr. Lee is therefore allowed.

[79] Other than the full recovery costs specified for the set-aside claim, the remaining costs would normally be partial recovery costs at 60% of the costs amount. I intend upon conducting a straight calculation on that basis and then, as with the Applicant, adding in any premium to be allowed respecting the Respondent’s unreasonable behaviour.

[80] In reviewing the Bill of Cost, I find that the hourly rates charged by the Added Parties’ solicitors is reasonable considering their experience and the time spent. I therefore calculate the costs payable as follows:

a. Total amount of full recovery costs (less HST): $242,855.00 b. Deduct trial time for Mr. Lee ($28,225.00) c. Back out fees in respect of set-aside claims: ($14,192.00) d. Subtotal $200,438.00 e. HST for fees (13%) $26,056.94 f. Add in disbursements $2,653.69 g. HST on Disbursements (13%) $344.98 h. Subtotal $229,493.61 i. Partial recovery costs (60%) $137,696.17 j. Add back in full recovery costs (re set-aside claim) $14,192.00 k. Plus HST on full recovery costs (13%) $1,844.96 l. Total $153,733.13

[81] As with the Applicant, the Respondent’s poor litigation behaviour lengthened this trial from what should have been a short focused hearing into an out of control train. However, proportionality respecting the claim of the Added Parties prevents their costs from being the same as that of the Applicant. The Added Parties shall therefore have their costs of this hearing in the amount of $175,000, payable within 60 days.

[82] I am aware that this endorsement requires the Respondent to pay $375,000 in legal costs in this matter. That is, as I said, a ruinous amount. As I noted above, the Respondent was and is well aware of the costs of legal services and he complained vociferously about the amounts that he paid to both his family lawyers and criminal lawyers. He ought to have been aware as this matter proceeded as to the costs results of his actions; a cynic might speculate that one of the reasons that the Respondent transferred much of his interest in his home to his partner was because of his liability for costs. Moreover, although the Respondent is being asked to pay for two sets of lawyers, I am not willing to find that the counsel for each of the Applicant and her parents were unnecessary or duplicated each other’s efforts. Throughout this litigation, each of those parties have had separate counsel and the claims of each of them are distinct. Moreover, the Applicant’s parents’ unjust enrichment claim results in both of the Applicant’s and the Respondent’s interest in the matrimonial home being ultimately reduced. There was no possibility of one counsel acting for both of the Applicant and the Added Parties to this proceeding.

Justice J.P.L. McDermot Date: October 31, 2024

[^1]: See Franks and Zalev Weekly Newsletter (October 28, 2024) at p. 3, citing Greco-Wang v. Wang, 2014 ONSC 5366. [^2]: O. Reg. 114/99 [^3]: This is the same hourly rate permitted to a self represented litigant in Izyuk v. Bilousov, 2011 ONSC 7476. [^4]: S.O. 1996, c. 31. [^5]: See the email from E.L.R. dated September 1, 2022 attached to the Applicant’s costs submissions.